A Smartphone Owners Bill of Rights

In a wireless market featuring high prices, limited competition and sparse regulation, it's time consumers got some protection.

Many smartphone owners are frustrated with the high prices they pay to wireless service providers, as well as the treatment they get from providers once they're locked into a two-year service contract. Americans have limited choices in mobile broadband devices and services, and mobile operators in the United States currently enjoy relative freedom from regulation.

Because of those two conditions and in light of the billions of dollars that U.S. consumers spend on wireless devices and services, a bill of rights is necessary to protect consumers against mistreatment by service providers. Following are the standards, safeguards and solutions that we'd like to see.

1. Smartphone owners should pay for wireless services by the bit, not by the minute or by the message.
These days, voice, data, and messaging all travel the same way--as bits of data--over the wireless operator's network. Therefore, charges for all of those services should be based on the same thing, by "bits of data transferred."

Using that standard would help consumers in two ways. First, it would create a real relationship between the actual work (moving bits) the mobile provider does to deliver the service, and the price it charges. Second, with charges made on the same basis, consumers would have a way to make genuine apples-to-apples comparisons between the costs of voice, data, and messaging services, and ask questions about any pricing disparities.

Currently, providers keep the actual cost of delivering wireless services completely hidden from subscribers, and that cost has no bearing whatsoever on pricing. The classic example is text messaging: The provider incurs almost no cost to deliver texts, yet charges customers 20 cents per message, or $20 per month for an unlimited messaging plan. Consequently, text messaging has become a $100 billion business--larger than the music, movie, and game industries combined.

Service providers should be required to offer a pay-as-you-go messaging plan wherein customers pay based on the amount of bandwidth they use to send messages, not on the number of messages they send. Also, the cost of SMS fees should not increase more than 1 percent in any given year.

Under the bits approach, mobile operators would be free to sell services at whatever prices they chose, and in whatever bundles they wished--as long as they disclosed exactly how much a consumer would pay, per bit of data transferred, for each service.

2. Smartphone buyers should be protected against abusive charges when they exceed service-plan limits.
In any limited-usage service plan, consumers shouldn't be charged more than 150 percent of the normal per-bit-transferred price of any service (voice, text messaging, or Internet access) after they've exceeded that service's plan limit.

For example, if a customer signed up for a data plan priced at $1 per megabyte of data transferred for the first 500MB, the carrier could charge the customer a maximum of $1.50 for each megabyte used beyond 500MB.

The same rule would apply to minutes-per-month or messages-per-month service plans. The 501st message in a 500-messages-per-month plan could not cost more than 150 percent of the 500th message, and so on.

3. Smartphone owners should not be held hostage in an unsatisfactory contract by the threat of excessive early-termination penalties.
Smartphone users should not be charged more than 7.5 percent of the total contract period cost of ownership (this includes both the cost of the device and the wireless service) if they choose to terminate their contract early.

4. Smartphone owners should be able to access any legal Internet site or service via the network; the service provider should not block or hinder the flow of packets from any site or service for any reason.
Carriers should not be able to "manage" the amount of wireless bandwidth that customers use by throttling the flow of packets from any specific, legal type of Website, Web application, or Web service.

5. Smartphone users should pay only for the bits of information they actively send or request over the network.
Wireless customers should not be charged for passively receiving a one-way communication, either from another wireless subscriber, from a landline, or from the operator itself. Only when the recipient of the communication decides to respond--when packets containing the customer's voice or data transmit back across the network--should the carrier charge the customer for network usage.

As such, passively receiving a voicemail message or text message from another party would not incur a charge, nor would listening to automated messages from the carrier's IVR system, such as voicemail instructions.

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